Engineering Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 46,000 engineering services firms in the US provide evaluation, investigation, planning, design, and development services related to utilities, structures, buildings, machines, equipment, processes, or systems. Specialty areas include civil, mechanical, industrial, electrical, electronics, computer hardware, aerospace, environmental, chemical, health and safety, materials, petroleum, nuclear, and biomedical engineering. Firms work on specific projects for clients and must be adept at project planning and management.
Dependence on Highly Skilled Personnel
Engineering service firms rely on a highly-educated, professional workforce.
Liability
Work site hazards and the complexity and scale of engineering projects expose engineering services firms to liability.
Industry size & Structure
A typical engineering services firm operates out of a single location, employs 25 workers and generates around $6.6 million in annual revenue.
- The engineering services industry consists of about 46,000 companies that employ over 1 million workers and generate $303 billion annually.
- Customer industries include general building, transportation, petroleum, power, hazardous waste, water, sewer/waste, industrial, and manufacturing.
- The engineering services industry is fragmented: The 50 largest firms account for only about 35% of industry revenue.
- Large companies include Fluor, Bechtel, and AECOM.
Industry Forecast
Engineering Services Industry Growth
Recent Developments
Jan 22, 2025 - Rising Electricity Demand Draws Interest of Oil, Gas Firms
- Some oil and gas majors are considering entering the electricity generation market amid the rapid uptick in energy demand by the data centers used to power AI, according to The Wall Street Journal. Chevron and Exxon Mobil are both in conversations with data center operators about providing natural gas-fired power generation with carbon capture. Large oil and gas companies have experience building gas-fired plants to support their various operating activities, including refining, petrochemical production, and natural gas liquefaction. Oil and gas majors may also have more recent plant construction experience than independent power producers, some of which have not built a new plant since the early 2000s. Oil firms can also site plants near their own fuel production sites and power data centers without needing to connect to the grid.
- Engineering News-Record’s Construction Industry Confidence Index increased eight points to 55 in the fourth quarter of 2024 compared to the previous quarter. An index reading over 50 points suggests a growing construction market. Nearly 45% of executives surveyed in Q4 2024 said they expected the construction market to improve over the next 12 to 18 months. Just over half of respondents expect the construction market to remain stable over the next 12 to 18 months, and 9% believe the market will decline. Overall, survey respondents were optimistic about the Trump administration’s impact on the construction sector, but some were apprehensive about possible changes to immigration and trade policy.
- After posting solid gains in 2023 and 2024, construction spending for nonresidential buildings is expected to slow significantly in 2025 and 2026, according to the American Institute of Architects’ (AIA) Consensus Construction Forecast released in January. Total spending for nonresidential building construction increased by 20% in 2023 and another 6% in 2024 but is forecast to slip to 2.2% in 2025 and 2.6% in 2026. For the next two years, growth will be led by data centers, which should support modest office construction in an otherwise challenging market. The warehouse sector is oversupplied, which will limit spending growth. Spending on institutional projects should remain stable as they are less susceptible to cyclical factors. AIA Chief Economist Kermit Baker said, “The modest outlook is partly based on a few expected headwinds to building activity, including potential tariffs on imports. There is also policy concern around how the construction labor force might be impacted by emerging immigration policy. Construction sector spending has been exceedingly strong – albeit unusually unbalanced – and coupled with these headwinds the projections are only very modest gains the next two years.”
- The Dodge Momentum Index (DMI) increased 10.2% in December 2024 to 212 (2000=100), up from the revised November reading of 192.3. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component improved by 14.2%, and the institutional portion increased by 2.5%. Dodge’s associate director of forecasting, Sarah Martin, said, “Commercial activity rebounded strongly in December, thanks to a re-acceleration in data center and warehouse planning activity. Overall, the strong performance of the Momentum Index this past year is expected to support nonresidential construction spending throughout 2025.”
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